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Too fast an expansion has impulsed famous Spanish clothing and accessories retailer, Zara, into quality scandals

for seven times since August, 2009, the China Business News reported Wednesday. In a recent testing report by Beijing Consumer Association, 57 sample products from famous brands in the market were tested. And Zara's had quality problems in fiber content, only that this time the company refused to offer justifications. Expanding too fast has been regarded as the main reason leading to Zara's quality problem, according to experts in the clothing industry. "Low price plus expanding too fast will definitely lead to the decline in quality of a company's products. The company has to reduce the cost of materials and human resources as market costs increase," an unnamed expert said. Zara inaugurated four stores in Shanghai in the first half of 2009, exceeding the total number of stores it opened in Shanghai since 2006 to 2009. The clothing company also aims to enter 42 cities in China from the current 30 in 2011. According to Cui Hongbo, a senior partner of United Wisdom, in the short term, these tid-scaled scandals are not likely to affect its sales. "Consumers would rather care for the style of some clothes than their quality. Quality is a factor that can ensure the purchase instead of one that can stimulate purchasing behavior," Cui said.

Organizations with a centralized structure have several layers of management that control the company by maintaining a high level of authority, which is the power to make decisions concerning business activities. With a centralized structure, line-and-staff employees have limited authority to carry something out without prior approval. This organizational structure tends to focus on top-down management, whereby executives at the top communicate by telling middle managers, who then tell first-level managers, who then tell the staff what to do and how to do it. Since this organizational structure tends to be fairly bureaucratic, employees have little freedom. Centralized organizations are known for decreased span of controla limited number of employees report to a manager, who then reports to the next management level, and so on up the ladder to the CEO (Figure 4).

Because individual creativity can be stifled and management costs can be greater in a centralized organization, many organizations continue to downsize into a more decentralized structure. Decentralization seeks to eliminate the unnecessary levels of management and to place authority in the hands of first-line managers and staff thus increasing the span of control, with more employees reporting to one manager. Because more employees are reporting to a single manager than before, the managers are forced to delegate more work and to hold the employees more accountable. Downsizing has

also helped to change the flow of communication, so that top management hears staff concerns and complaints in a more direct manner and management has a more handson approach. The hands-on approach involves less bureaucracy, which means there is a faster response to situations that demand immediate attention. This structure also takes advantage of bottom-up communication, with staff issues being addressed in a timely manner. The restructuring generally takes place at the mid-management level. Because some middle managers have lost their jobs, been laid off, or simply taken advantage of early retirement and severance packages, their positions have been phased out, thus helping to reduce unnecessary costly salaries and increasing employee span of control. Many middle managers who stayed in their current "positions" found that their jobs have changed to being coaches, or team leaders, who allow their employees greater freedom in completing their work responsibilities (Csoka, 1995, p. 3). The chain of command is the protocol used for communication within organizations. It provides a clear picture of who reports to whom. Quick decisions can be made in decentralized organizations because approval usually has to come only from the manager one level higher than the person making the decision. The chain of command involves line-and-staff employees, where the staff's job is completing the actual work and the line functions to oversee the staff

Centralization and Decentralization? Description An organization has to make strategic and operational decisions. Where and by whom should these decisions be made? And: how should the organization structure be adapted? Centralization and Decentralization are two opposite ways to transfer decision-making power and to change the organizational structure of organizations accordingly. Centralization:

Definition: The process of transferring and assigning decision-making authority to higher levels of an organizational hierarchy. In a centralized organization, the decision-making has been moved to higher levels or tiers of the organization, such as a head office, or a corporate center. Knowledge, information and ideas are concentrated at the top, and decisions are cascaded down the organization. The span of control of top managers is relatively broad, and there are relatively many tiers in the organization. Compare: Fayol.


Definition: The process of transferring and assigning decision-making authority to lower levels of an organizational hierarchy. In a decentralized organization, the decision-making has been moved to lower levels or tiers of the organization, such as divisions, branches, departments or subsidiaries. Knowledge, information and ideas are flowing from the bottom to the top of the organization.

The span of control of top managers is relatively small, and there are relatively few tiers in the organization, because there is more autonomy in the lower ranks.

Three Forms of decentralization

Deconcentration. The weakest form of decentralization. Decision making authority is redistributed to lower or regional levels of the same central organization. Delegation. A more extensive form of decentralization. Through delegation the responsibility for decision-making is transferred to semi-autonomous organizations not wholly controlled by the central organization, but ultimately accountable to it. Devolution. A third type of decentralization is devolution. The authority for decision-making is transferred completely to autonomous organizational units.

Strengths of Centralization. Characteristics

Philosophy / emphasis on: top-down control, leadership, vision, strategy. Decision-making: strong, authoritarian, visionary, charismatic. Organizational change: shaped by top, vision of leader. Execution: decisive, fast, coordinated. Able to respond quickly to major issues and changes. Uniformity. Low risk of dissent or conflicts between parts of the organization.

Strengths of Decentralization. Characteristics

Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics. Decision-making: democratic, participative, detailed. Organizational change: emerging from interactions, organizational dynamics. Execution: evolutionary, emergent. Flexible to adapt to minor issues and changes.

Participation, accountability. Low risk of not-invented-here behavior. Read more: decentralization#ixzz1P0Cjglwe